The government Tuesday hiked excise duty on petrol and diesel by Rs 10 and Rs 13 per litre respectively. The price hike will be absorbed by Oil Marketing Companies leading so there will be no increase in retail prices of fuel at the pump, a finance ministry official said.

While the road and infrastructure cess has been levied on petrol and diesel at Rs 8/litre, special additional excise duty on petrol has been hiked by Rs 2/litre and on diesel by 5/litre. This, after states hiked local sales tax or value-added tax (VAT) on the two fuels to compensate for falling revenues due to the nationwide lockdown.

The country's oil marketing companies (OMCs) have not changed the base prices of petrol and diesel since the mid of March, however, due to a rise in VAT by various state governments in the recent weeks, the retail prices of the key automobile fuels have shot up.

Petrol price in the national capital was hiked by Rs 1.67 a litre and diesel by a steep Rs 7.10 per litre after the Delhi government raised local sales tax on the two fuels.

In March this year, a day before a nationwide lockdown was announced to contain the spread of the novel coronavirus, the government raised the cap on special additional excise duty on petrol and diesel to Rs 18 and Rs 12 per litre.

Last year's Finance Act had put the cap at Rs 10 per litre for petrol and Rs 4 per litre for diesel. The change in the cap enabled the government to raise duties on petrol and diesel by another Rs 8 per litre each respectively.